It’s fair to say that Covid-19 has created a significant shift in the way in which we manage our finances, with ONS data revealing that more than half of Brits (54%) have seen minor, moderate or major reductions in their spending since the pandemic began.
Interestingly, most individuals cutting back (62%) are within the 25-to-34 age demographic, while those even younger (16-to-24) are most likely to record major spending reductions.
This highlights a clear financial issue, but what are the best ways to improve your finances in the current climate? Here are some ideas to keep in mind.
1. Planning is Key
Planning and budgeting should always be your starting point when looking to improve your finances, as you look to create a clear spending plan for the week or month at hand (depending on your income and how often you’re paid).
This will not only enable you to understand precisely how much disposable income you have to clear debt, fund recreational purchases and bolster your savings, but it also highlights your precise financial circumstances and whether or not you’re spending within your means.
With clear planning and visibility, you can cut back on identifiable excesses, while ensuring that you’re prioritising the payment of debt and optimising the amounts regularly committed to saving.
2. Become a More Frugal Spender
At this stage, you need to drill down deeper into your spending habits, with a view to becoming a more responsible consumer and ensuring that you get the absolute most of your weekly or monthly income.
The goal here is to become a more frugal spender overall, as you look to distinguish between wants and needs and remove the former from your budget in instances where they start to place pressure on your disposable income.
To achieve this, you can simply list all items of expenditure and group these into categories, affording each on a priority level and organising your future spending accordingly.
Remember, the key to improving your finances lies with reducing everyday living costs, rather than targeting big ticket but infrequent purchases.
3. Look for New Ways to Make Money
There’s an old adage which suggests that you have to speculate to accumulate, particularly in an economic climate where savings rates are at record lows and real wages remain sluggish when compared to inflation.
So, you may need to seek out new ways to make money and boost your earnings when looking to enhance your finances, prioritising passive income streams that don’t force you to compromise your day job.
If you have an existing knowledge of finances and the economy, you may want to consider forex trading. This involves the trading of international currencies in pairs and as derivatives, creating a scenario where you can speculate on the trajectory of one price against another and profit without assuming ownership of the underlying assets.
We’d recommend starting out with a demo account, through which you can access a real-time and simulated marketplace where you can hone your strategies without risking your hard-earned cash.